Tag: budgeting

Recent pronouncements and actions from the Ministry of Budget and National Planning point to the expectation that the 2018 budget proposals will get to the National Assembly for consideration before the end of October 2017 as promised by the Executive arm of government. This is a worthy and welcome departure from the past. The decision to present the budget early is informed by the National Assembly’s unnecessary delay in budget approval in the last few years and particularly in the last two years. Delay in the approval of budget is unhealthy for economic recovery and growth, even when there is agreement that the Executive can rely on past budget approval or existing budget to spend money on some important recurrent items. Some members of the Legislature are already insinuating that the budget approved for 2017 can be implemented till sometime next year. The implication of such a statement is that they do not care whether the draft budget is submitted 0n time or not, they will take their time to consider it. It is like working at a crossroads with the thinking on the executive arm which cannot augur well for the progress being made in exiting economic recession.

Budget consideration by the Legislature is a major assignment and part of the existence of a National Assembly. In what is referred to as budget cycle, the second phase of the cycle is Legislative Cycle or Legislative Phase which end product is authorisation of spending on budget programmes and projects. The first phase has to do with the preparation of the budget by the Executive arm of the government and this is done through submission, presentation and defence of the budget estimates by the Ministries, Departments and Agencies of the government. The final output of the exercise of the first phase, the Draft Budget, is then presented to the Legislature for its consideration and approval of programmes/projects and fund allocation. The way budget considerations have been treated by the National Assembly in the past few years undermined the importance of the exercise. Even many state Houses of Assembly treat budget matters with the seriousness and urgency required and the impact of the budget implementation is felt within the short time the budget was passed. The National Assembly members would have budget on their laps and adjourned for weeks to go on festivities that have nothing to do with economic development. On resumption, they begin with the fanfare of inviting the MDAs for comprehensive defence of the budget instead of asking them to clear the grey areas. They would start looking for where to put their constituency petty projects in the draft budget instead of looking for national spread of major capital projects, etc. In the process, they engage in intimidation and harassment of the ministers and directors of agencies with a view to showing that they are more powerful than the Executive in budget matters. The whole processes become so long that by the time the budget is passed, three to four useful months in a particular year would have been wasted.

Many studies, including the one I and my colleagues recently conducted and published, have confirmed that budget implementation can take up to three or four months before its effects are felt. The results, for example, show that capital expenditure on social and administration sectors would have quicker effects within three to four months of implementing the budget than those on economic and service sectors which take longer periods. In the case of Nigeria where lots of bottlenecks are put in place in the name of following due process, budget implementation starts long after the passage of the budget. What this means is that when a budget is presented by the Executive arm of government in December and it is eventually passed by the Legislature in April or May of the following year with further delay in release of funds by the Ministry of Finance following snail’s pace due process, the actual spending cannot take place until May or June. The long delays in implementation thus cause further three to four months delay in budget effects on the economy. At the end of that budget year, not much effect would have been noticed and by law, the MDAs would have to return unspent funds.

I was shocked, yet surprised, the last time some federal lawmakers accused the Ministry of Power, Works and Housing of spending less than 20 per cent of its allocation and returned the remaining amount. Shocked because the lawmakers deliberately cut down heavily on the ministry’s budget request for the following year on the grounds that if it could return large proportion of the approved budget unspent, it does not need to get bigger or equal amount in new budget approval. Surprised to know that Nigeria has so evolved that ministries could return unspent funds unlike before when end-of-year massive spending on frivolities would wipe off the funds and nothing would be achieved with none queried from any quarter!

A number of factors were involved in prolonging the period of current economic recession and the delay in budget approval and implementation is a major candidate which is from the fiscal policy side while rigid adherence to high interest rates from the monetary policy side contributed its own profane effects. As it were, the fiscal policy operators have decided to present the budget early enough (October 2017) for consideration by the Legislature with the hope that budget implementation could start in January or February 2018. This is a desirable and laudable shift from what used to be and it is imperative that the Legislature too must adjust their modus operandi in support of the new procedures and processes. South Africa recently witnessed recession shortly after Nigeria’s recession took hold but the recovery was fast because every arm in the governance of the country played its role and the central bank supported the fiscal side to reflate the economy.

If the budget proposal is submitted before the end of October, the National Assembly should be able to pass the budget before going on recess for Christmas. Passage of the 2018 budget before the New Year simply implies that the effects of its implementation on the economy should be visible by the beginning of the second quarter of the year. This is desirable for an economy coming out of recession to avoid relapse and promote rapid growth. It is a matter of commitment, national priority over personal convenience and patriotism over party allegiance.

By 2019, Nigeria would have practised democracy for 20 years for the first time since our flag independence. Before then, some institutions should have matured and institutional framework put in place to show that the country has come of age democratically. Such institutions include the Legislature at both federal and state levels, the Judiciary, the Due Process Office, human rights and the agency for checking corruption. For instance, the executive arm should standardise the month of the year for budget presentation while the legislature should fix the period for budget consideration and approval. Such institutionalised framework allows the private sector to plan their operation and key into the economic planning of the government.

Nigeria pays a lot of money for the services of the Legislature and is not getting value for the money. Fortunately, Nigerians, particularly the youths, are becoming wiser and impatient. They know which institution or institutions are not measuring up to the required standard and will not mind protesting against such as the first step towards political emancipation. Any further delay in budget approval henceforth should attract a form of orderly protest from both youths and non-partisan elite.

A quick recovery from the recession can be engineered by timely passage of the 2018 budget and sagacious implementation of the recurrent expenditure which promotes the demand side and the capital projects/programmes which have higher multiplier effects on economic variables like employment generation, lowering of inflation and general increase in outputs. Appealing to the legislative arm of government is akin to begging them to do the work they are overpaid for. It is unnecessary to make an appeal. Getting the 2018 budget passed by the National Assembly before the beginning of the year is like telling Nigerians that they are co-partners in moving Nigeria forward and taking democracy in Nigeria to a higher level. The choice is theirs.

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The Kwara State Governor, Alhaji Abdulfatah Ahmed, has identified training and effective budgeting process as being important to quality service delivery and growth of the state.

He stated that the government and corporate organisations should have effective and efficient budgeting process.

He also said human capital development was essential to better service delivery by the government and corporate organisations.

Ahmed, who was represented by the Commissioner for Planning and Economic Development, Alhaji Wasiu Odewale, spoke at a workshop on effective and efficient budgeting process for all tertiary institutions in the state in Ilorin on Tuesday.

The governor said budget was an indispensable tool for the achievement of socio-economic development of the state.

He stated that budgets, when carefully prepared and meticulously implemented, had high potential to facilitate social transformation and economic advancement.

Ahmed advised that the process of budget making for organisations and government, and the budget document itself should be treated and handled with all the seriousness they deserved.

He stated that the workshop was borne out of the need for considerable improvement in the quality of submission of all the tertiary institutions in the state to correct what was observed during the last budget review.

“This workshop/training is meant to broaden and sharpen the knowledge of officers saddled with the responsibility of budget preparation with the necessary techniques to ensure an effective and efficient budget management and implementation for better performance and improvement of socio-economic development of the state and the country as a whole,” Ahmed said.

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As you head off to school, it is very possible that your only banking experience up until now was the special savings account you had as a kid that came with toys and treats when you reached your small savings goals.

If that is the case, it is time to graduate to the next level of a higher student banking, according to www.citizensbank.com.

Pick the best bank for your needs

If possible, open a student bank account before you get to campus. It will be one less task to take care of during freshman orientation. To do this, figure out which banks have branches and Automated Teller Machines near campus. Some may even be on campus. This will come in handy if you need to visit the bank to deposit or withdraw money, or if you want to get money from an ATM without paying fees. You should also make sure that the bank you select offers convenient features, like: online banking, mobile alerts, paperless statements, low fees, and special accounts and packages just for student banking

Open a student current account

A good first account to have is a student current account that offers the convenience and benefits you want. It is designed so you can easily perform transactions like withdrawals, deposits and transfers on a daily basis. If you get a campus job or your parents send you a little cash now and then, put that into current rather than keeping it in your wallet to make sure it is secure.

To access your student current account, you will be given an ATM or debit card that you can use to make purchases. You can also write cheques or even consider applying for a credit card. You will also receive monthly statements, which can help you manage your spending.

Look for a student current account with features you will use

On top of paperless statements and an easy-to-use debit card, you should also look for a student bank account that comes with perks you can use. For example: See if you can sign up for mobile alerts when your balance gets low. Find out if the account makes you eligible for student discounts at places like restaurants or movie theaters. Ask about cash back rewards. Make sure you will have 24/7 live support.

Open a savings account

One of the best saving tips for students is to start saving right away! Yes, even though you may not be making much money, you can still stash away some of what you have for a rainy day. What will you do if your computer dies, your bag finally rips in half, or you need to buy an extra expensive textbook? That is when you will wish you had a little money saved.

Once you have your savings account, you can easily transfer money from your current account. And, if you have a steady income enough, you can set up automatic transfers from current into savings. Even if it’s only N1,000 per week, it will add up and could come in handy someday.

Start budgeting

Again, this is something you may not be thinking much about given your limited income. But, following some basic budgeting tips can help you avoid the stress of always being broke, or worse, going into debt. For example, avoid opening credit cards if you are not making any money. The temptation to max out a credit card can be too great. If you go to the movies a few times, make a trip to the mall, decide to go out to dinner with friends, and then buy the latest DVD or video game, pretty soon you have run up a bill you can’t pay.

Another budgeting tip is to look for cheaper alternatives to planned activities. Look for coupons online or sign up for email discount lists so you can buy the things you want for less. There are plenty of discounts available just to students, so be sure you always have your student ID with you.

Whether you’re an entering freshmen or a senior who’s looking to get your finances in order, take advantage of your bank’s student banking options. It’s easy to apply and get your student account open today.

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You are enthusiastic about creating a budget and managing your money carefully. Your spouse groans at the idea. What can you do?

Many people find themselves in this exact predicament every day. One spouse or partner tends to be fiscally-minded, while the other pays no attention to money and scoffs at the idea of drastically cutting back.

How can the two of you reach financial harmony? Here are a few tips that might help get your spouse or partner on board with the idea of budgeting.

Set a common goal

Don’t open the conversation by saying, “Honey, I think you need to cut back on X.” A statement like this frames the idea of budgeting and saving in negative terms. This makes financial management look like a string of orders and deprivations.

Instead, open the conversation by saying, “Honey, let’s talk about some of the goals we want to accomplish within the next five to 10 years. What would we like to do?”

The two of you should have a long conversation about what your ideal life looks like together. Don’t discuss money at this point – just talk about the vision. Here are a few ideas to get you started:

Would you like to spend one month travelling through Europe together?

Would you like to buy a sailboat and spend a few months in the Caribbean?

Would you like to make a down payment on a house, or trade up from your current starter home to a nicer forever home?

Would you like to pay off your mortgage entirely, or pay cash for your next vehicle?

Would you like your child’s college funds to be $25,000 fuller?

Would you like to retire by age 55, start your own business, or create a new non-profit organisation in your community?

Discuss this myriad of goals without touching on the financial aspect. Find out what visions and goals you both share for the future.

Attach monetary values to your goals

Once you have agreed on your goals for the future, introduce the concept of money and phrase it in realistic estimations.

A 20 per cent down payment on a $200,000 home, for example, comes to $40,000. A one-month trip around Europe for two people might come to $4,000 – $10,000, depending on the level of luxury you seek.

Paying cash for your next vehicle might cost between $8,000 and $20,000, depending on what type of vehicle you want.

Retiring early might hinge upon maxing out your 401(k) every year. As of 2015 contribution limits, that comes to $18,000 per year per qualified individual.

At this point, you have numbers and you have a timeframe. Simple division can help you understand how much money you need to set aside every month in order to reach your goal.

Saving $40,000 over the next five years, for example, requires saving $8,000 per year, or $665 per month. If you want to save this amount for the down payment on a home, you now know how much you’ll need to set aside every month.

Talk about saving

Now that you have a specific monthly savings target, you should discuss how to find this money. Suggest cutting back on a few expenses, earning extra money on the side, or a combination of both in order to hit your monthly savings goal.

Your spouse may be a bit more on board now because the conversation isn’t framed in terms of cutting back. The conversation is framed in terms of trading one expense for another. You can either spend $600 per month dining out at restaurants, or you can have enough money to make a down payment on a home within five years. At your current level of income, you can’t necessarily have both, so which would you prefer?

By framing the conversation in terms of trade-offs rather than sacrifices, your spouse is far more likely to be receptive – especially if you work towards the goals your spouse is excited about.

If the two of you haven’t decided on which goal to focus on, let your spouse talk about what he or she envisions. You will be able to tell what they are most excited about by the goal they bring up most often. That goal is likely the one they will be most happy to save for.